Housing Risk Informing the consumer

Bruce Marks

CEO

Neighborhood Assistance Corporation of America

Over the past several years the CFPB has been responsible for increasing awareness and

protection and to promote safe and effective mortgage lending as a result, 2014 introduces a

new era of CFPB oversight, imposing stronger regulations on almost every aspect of the lending

process. Is it all good for the borrowers?

Minimizing housing risk in the new era

of CFPB regulation

Factors that increase risk

1. Disregard for ability to repay the loan

2. Lending above 43% DTI with no consideration on household expenses

3. Steering consumers into risky loan products that build no equity

4. Not preparing the borrower for Payment Shock

NACA Factors to reduce risk

1. NACA determines homeownership readiness based on comprehensive counseling

2. The borrower must demonstrate affordability of the desired house payment not just ability to meet DTI limits

3. No added products or fees that add no value to the borrower

4. Post-Ownership assistance is available for as long as the borrower owns the NACA loan

NACA

HOME

The NACA Product

• No down payment

• No closing cost

• No points and fees

• No perfect credit

• Below market rate

NACA

HOME

HOEPA Restriction

HOEPA’s threshold includes buy-down funds in the

points and fees calculation for high cost loans

Buy-down is most effective in making the mortgage affordable

NACA’s agreements with the

participating lenders have aggressive

buy-downs to lower the interest rate

to virtually zero percent.

Risk Protection

Comprehensive counseling includes:

1. Credit Counseling

2. Budget Counseling

3. Cash Flow Analysis

4. Demonstrated Payment Shock Savings

The NACA Product is unique

While we have agreements with Bank of America

and Citi Mortgage to fund our loans, we make

the decision when a borrower is ready for

homeownership and for how much house

Four ways of reducing risk on Multi-family

4

The Cash Flow Analysis for Multi-family must

demonstrate the current net cash flow reflects

the Member’s ability to afford and manage a

multi-family home.

3 Demonstrate a surplus of at least $400 per month to

address tenant vacancies, repairs and other issues.

2

The Member must demonstrate additional reserves

of at least two months mortgage payment before

qualification

1

Members who purchase a multi-family

property must attend a Landlord Training Class

If a property is not livable until after the repairs are completed, the Member can add six months of PITI to the loan. The interest rate is permanently reduced by .375 to maintain the payments the same or lower

NACA Members can finance the funds needed for property rehabilitation

NACA Purchase-Rehab

Did You Know?

NACA HOME

NACA financial assistance

Act as a liaison between Lender and member and

additional resources for assistance

Assistance with loan modification including payment plans

Post-Purchase counseling including budget counseling

4.

3.

2.

1.

NACA’s Membership Assistance Program (MAP)

NACA offers post-ownership services to ensure homeowners experiencing a

hardship receive assistance to become successful homeowners

Any

Questions

ON BEHALF OF

THANK YOU!

Copyright NACA 2014